Chapter 3: Resource Allocation and Priority Setting

The Colombian health reform was one of the first examples of implementing managed competition in the developing world (Plaza et al. 2001). To stimulate competition among insurers and health service providers, both public and private, health reformers applied the theory of managed competition (Enthoven 1993). According to this theory, competition achieves efficiency and reduces cost , making health care services responsive to consumer needs (Londoño and Frenk 1997). Hospitals become responsive when they are able to sell services and become financially sustainable. To achieve sustainability, supply subsidies (direct transfers from the state to hospitals) had to replace demand subsidies (transfers directed to the poor through a subsided s ecurity plan).

The Colombian reform established a General Social Security System in Health that featured two insurance plans: (1) The Contributory Plan, financed by mandatory contributions (formal employees and employers from the public and private sectors). (2) The Subsidized Plan, funded by resources from the Contributory Plan and from taxes and other sources, which covered people unable to pay (Vargas et al. 2010). The actors of the system are the insurance companies, the health service providers, and the state regulatory organizations. Insurance companies contract with health service providers, and the regulatory organizations control compliance with the defined basic health packages.

To optimize resources, the reform placed controls on medical practitioners and established explicit priority criteria based on clinical guidelines that defined benefit packages. From 1993, some adjustments to the reform have been introduced, such as the creation, in 2012, of the Institute for Health Technology Assessment to provide a n evidence base for health decisions. The Institute recommends which medical technologies should be paid with public resources on the basis of which technologies optimally improve the quality and cost effectiveness of medical care. To determine these technologies, it conducts health outcomes research that guides technology development, evaluation, and use (Giedion et al. 2012).

Nevertheless, 20 years later, the promise of reform lies unfulfilled and many patients still experience high out-of-pocket costs, long wait times, or denial of services. To access health services, frustrated citizens are turning to the legal system as a last resort and, by so doing, congesting the courts (Defensoría del Pueblo 2012). Physicians are responding to economic incentives and penalties by restricting hospitalization time and decreasing the use of expensive diagnostic tests and specialist referrals (Abadía and Oviedo 2009). To further reduce labor costs, service providers have increased the workload of health profession als and the number of patients seen per day, whi le reducing the time spent with each patient (Defensoría del Pueblo 2007).

Insurance companies often take a long time to pay health service providers, and they also contract their own service network (a process known as vertical integration), so many public hospitals are in serious financial difficulties. Meanwhile, hospital workers frequently disrupt the normal operation of hospitals as they strike to improve work conditions and have their paychecks issued more promptly. Should hospitals fail—40 % of the 968 public hospitals in Colombia are classified as being at medium or high financial risk —nearly ten million people could be left without health service (Ministerio de Salud y Protección Social 2012; Quintana 2002). Add to that, the reforms have increased inequity, as more affluent patients can more easily access quality health care services than can low-income patients (Vargas et al. 2010).

The described problems reflect a complex situation that requires profound structural reform . As one way to address the immediate problems of efficiency and quality, Colombia in 2012 instituted public hospital accreditation. Accreditation requires hospital directors to reach goals in service delivery related to financial viability, quality, and efficiency. Hospital boards can now fire directors who fail to meet these g oals within a specified period (Rodríguez 2012). Given the imbalances between budgets, service demands, and ongoing costs, hospital directors face enormous challenges and ethical dilemmas in formulating and executing their mana gem ent plans.

Taking seriously your fiduciary responsibilities, you try to guarantee financial sustainability by containing labor costs, restricting consultation times, and shortening hospital stays. Your challenge is to do these things without diminishing the quality of patient care. But because you compete with other institutions, you must also assure sufficient reserves to maintain and update medical equipment that will improve the “sale of services.” Knowing that every management decision you make will affect the population you serve, you begin to reflect on the factors affecting your h ospital man agement plan.

Lack of access to mental and behavioral health services for children 5 years and younger especially threatens their development. Rapid brain growth occurs in the first 5 years of life, which lays the foundation for cognitive, emotional, and moral development. Exposure to chronic stress can prompt the release of hormones in the brain that can have enduring consequences for how the adult brain is organized and how it functions (Shonkoff and Phillips 2000). Because poor health can show up in children as developmental delay, access to mental and behavioral health services is critical. Longitudinal studies demonstrate positive and long-acting effects of early childhood interventions, such as environmental enrichment programs, on a range of cognitive and noncognitive skills, social behaviors, academic achievement, and adult job performance (Heckman 2008). The esti mated annual rate of return on investment from targeted early childhood development programs is 7 %, and early intervention reduces the predictable need for higher, more costly levels of care in later life (Heckman et al. 2010).

In the United State s, Medicaid is a government-funded program that provides health coverage to people with certain disabilities and to low-income adults and their children. The Federal Medicaid Act (FMA) requires states participating in Medicaid programs to provide medically necessary treatment to eligible children. Under federal Medicaid law , states must provide “early and periodic screening , diagnostics, and treatment,” also known as EPSDT services, to eligible Medicaid recipients under age 21 (U.S.C. § 1396d(a)(4)(B)). The definition of EPSDT includes necessary health care, diagnostic services, treatment, and other measures described in the Medical Assistance subchapter for the United States Code (42 U.S.C. § 1396d (a)) (2012) that correct or ameliorate defects and physical and mental illnesses and conditions discovered by the screening services, regardless of whether such services are covered under the state plan (42 U.S.C. § 1396d (r)(5)) (2013). The medical necessity standard , which is based on clinical standards of care, refers to interventions that may be justified as reasonable, necessary, or appropriate. States must comply with the FMA standard to cover all treatments for a Medicaid-eligible child’s physical or mental condition, even if service coverage is optional for adults covered by Medicaid. FMA also bars states from arbitrarily denying or reducing the amount, duration, or scope of a required service to an otherwise eligible recipient solely because of the diagnosis, illness, or condition (Nebraska Legislature 2012).

Despite the provisions of FMA, the U.S. Department of Health and Human Services, which oversees the Medicaid program, excludes certain behavioral health treatments for children with developmental disabilities and autism (National Health Law Program 2012; Autism Society of Nebraska 2012). In addition, some states’ Medicaid contracts allow insurers more freedom than other states to deny payment for services. States also vary in who—the claimant or the insurer—must prove whether coverage provisions are adequate or fall short of federal Medicaid legal standards (Rosenbaum and Teitelbaum 1998). Differences among states in approval of payment for specific treatments, including mental and behavioral health treatment, illustrate the need for more consistency in Medicaid coverage provisions and the lack of parity between mental and physical health coverage. Mental health benefits must be offered at parity with medical services to newly eligible recipients as part of the 2010 Patient Protection and Affordable Care Act (ACA), and Medicaid expansion controversy is clear evidence that parity is a work in progress (Mental Health America 2013; U.S. Department of Labor 2008).

Because of inadequate coverage for mental and behavioral health services for Medicaid-eligible children , some parents have no option other than to surrender their child to the child welfare system so that the child will receive full coverage for necessary mental and behavioral health care services. This results in significant cost-shifting from Medicaid to the state’s child welfare system. That is, when a state provides federally mandated services to Medicaid-eligible children, it receives a financial match from the federal government to pay the cost s. When a state denies federally mandated Medicaid services and a family surrenders a child to state custody so the child can receive care, the state pays the expense of the previously denied Medicaid costs plus the expense of entitlements the child acquires as a ward of the state.

The ACA Medicaid expansion offers a window of opportunity to increase coverage for behavioral health treatment for children with mental illnesses. Although the federal government will bear the primary financial burden of Medicaid expansion, some states have elected, for political reasons, not to participate in this expansion. For participating states, ACA Medicaid expansion will replace state and local mental health services funds with federal Medicaid money that will cover a wider range of home and community-based services for mental illness treatment (Bazelon Center for Mental Health Law 2012).

Public health agencies and leaders often provide input for the Medicaid system, helping to develop protocols, criteria, and rules about which treatments are defined as medically necessary. Such decisions about medical necessity affect clinicians, patients, and families because they determine which treatments get recommended at the clinical level and influence which treatments insurers cover.

Recently, the case of 4-year-old Sam has come to your attention. Sam’s family cannot afford mental and behavioral health care for Sam, although he is Medicaid-eligible and insured through Magiscare (a private company with a state contract to administer Medicaid for mental and behavioral health services). Sam’s parent s are considering surrendering their boy to become a state ward to get him the mental health services he needs.

Sam, you learn, eats random objects and dirt, throws tantrums, bangs his head on the ground, hits and bites himself and others, and often runs away. Recently diagnosed by his physician as having autism, Sam was referred to a psychologist who recommended outpatient behavioral therapy. Both the physician and the psychologist expect this therapy to be covered through the family’s Magiscare plan.

Magiscare denied the psychologist’s requests for payment on the grounds that, for children of Sam’s age, behavioral management is not covered under state law because it is not “medically necessary.” Magiscare substantiated their denial of payment because Sam’s behaviors primarily reflect developmental disabilities related to autism, which are not covered under their contract with the state. When you ask the Magiscare executive director about this case, she suggests that Sam’s parent s could attend therapy sessions to help them cope with their son’s behaviors, but she reasserts that behavioral management is not covered for children as young as Sam under state law because it is not medically necessary.

Members of the state legislature and child mental health advocacy groups are trying to expand access to home-based and community-based mental health services. They have asked you to support their efforts. You also consider that your governor, who is your boss, has publically stated his firm opposition to ACA Medicaid expansion, thus denying the state the opportunity to expand coverage for children’s mental and behavioral health treatment through the ACA. At present, you know that your state is offering limited mental and behavioral health service s and that narrow definitions of medical necessity are used to limit access to those services.

As the state Medicaid director, which steps should you take?

Population health challenges, such as influenza pandemics, are increasingly complex, and tackling them involves urgently executing a wide array of public health measures to prevent disease transmission. In the case of influenza pandemics, measures can vary from border quarantine, social distancing, provision of antivirals and vaccine s, and personal hygiene strategies. Recommendations often need to be made quickly even when knowledge about the seriousness and potential health and social effects are incomplete. The target for preventive interventions is the entire population. However, resources for intense and sustained health campaigns through mass communications are expensive. In addition, the social determinants of the disease must be understood and considered (Crowcroft and Rosella 2012). This typically involves the need for policies that engage the health and non-health sectors, such as educational policies and social or economic factors (Savoia et al. 2012). This complexity, together with decreasing funds and other factors, has contributed to increasing private sector involvement in health care.

According to the World Health Organization (WHO), a public-private partnership gathers a set of actors for the common goal of improving population health through agreed roles and principle s. This may also be described as public sector programs with private sector participation (WHO 2013). WHO has described several types of partnerships, including philanthropic, transactional, and transformational. Sponsorship is a form of a public-private partnership defined as “any form of monetary or in-kind payment or contribution to an event, activity, or individual that directly or indirectly promotes a company’s name, brand, products, or services” (Kraak et al. 2012). In this sense, sponsorship is a commercial transaction, not type of philanthropy.

Public-private partnerships have become increasingly common for public health campaigns. Some transnational companies and their corporate foundations collaborate with public institutions, such as United Nation s agencies and government s, to tackle complex public health problems, such as treatment of diarrhea in developing countries (Torjesen 2011), tuberculosis , and malaria (Ridley et al. 2001). These collaboration s have been encouraged by international institutions and experts as a way to mobilize resources and expertise, which could complement the public sector. WHO has also encouraged using public-private partnerships to deliver health services for a range of health problems, including HIV infection, malaria , tuberculosis , trachoma, and vaccine-preventable diseases (Buse and Walt 2000a, b). However, corporations’ increasing role in public health has been criticized as jeopardizing the mission of public health and its commitment to population health (Hastings 2012; Ludwig and Nestle 2008). Some corporations have used tactics that discredit public health actions, such as distorting scientific information and using financial tactics and political influence to avoid unfavorable regulations (Wiist 2011).

Public health profession als, public health agencies, and governments often must decide whether to collaborate with the private sector to improve population health. These decisions are increasingly frequent as health department budgets shrink and public-private partnerships are seen as a way to secure funds for core public health programs. Ethical considerations can help us decide whether and when to form such partnerships. However, the available public health ethics frameworks (e.g., Public Health Leadership Society 2002; Nuffield Council on Bioethics 2007; Kass 2001) do not specifically discuss public-private partnerships. Only the Public Health Leadership Society provides guidance for such collaborations. Principle 10 proposes that, “Public health institutions and their employees should engage in collaborations and affiliations in ways that build the public’s trust and the institution’s effectiveness.” Continued discussion about the ethical implications of private-public partnerships is needed.

The head of the health department arranges a meeting with several health authorities and officials to consider the offer. On one side, some members of the group support the proposal because of the need to carry out far-reaching public health campaigns to limit the impact of pandemic flu. At that stage, the incidence of pandemic flu is increasing quickly and the number of new outbreaks in schools is worrying the health authorities and the population . There have been recent budget cuts to the health department, and some officials argue the company’s contribution may be the best option to ensure a far-reaching campaign on prevention measures to benefit the population. They see sponsorship as a form of social responsibility because the company does not have any apparent economic interest in flu-related activities. They also note that there are no other companies offering a similar collaboration.

But other officials say the company’s soft drink products contribute to the obesity and diabetes epidemic and that the company’s use of the health department logo would label it a pro-health industry with the backing of the highest health authority in the country. They also raise concerns about risking the independence of the health department in future regulatory action on sugar-rich beverages.

As the hea d of the health department, you must decide if you should collaborate with the company.

During the twentieth century, U.S. infant mortality declined 93 % (MacDorman 2011). In 1900, about 100 infants died per 1000 live births. By 2000, that number fell to 6.89. During the last half of the twentieth century, the rate of black infant mortality dropped dramatically. In 1950, black infant mortality was 43.9 deaths per 1000 live births compared with 26.8 deaths per 1000 live births among whites (Mechanic 2002). But by 1998 black infant mortality fell to 13.8 deaths per 1000 live births compared with 6.0 deaths per 1000 live births among whites. As these numbers show, both groups made significant absolute gains, with blacks gaining more in absolute terms—a reduction of 30.1 for blacks and 20.8 for whites. Yet, black infant mortality still remained about twice that of whites.

These disparities have persisted in the twenty-first century. In 2006, non-Hispanic black women experienced the highest rate of infant mortality, with 13.4 infant deaths per 1000 live births, while non-Hispanic white women had a considerably lower rate, with 5.6 infant deaths per 1000 live births. Citing a 2006 report from the National Healthy Start Association, MacDorman and Mathews (2009) report that programmatic efforts to reduce disparities in black-white infant mortality have had some successes at local levels, but eliminating the disparities is difficult.

The U.S. Centers for Disease Control and Prevention and the U.S. Department of Health and Human Services have prioritized both the elimination of health disparities and improvement in overall population health. These twin goals—one distributive, the other aggregative—are separate and sometimes conflict (Anand 2004). Increases in health disparities often accompany advances in aggregate gains in population health (Mechanic 2007). Although this case is specific to the United State s, the dilemma is not. Data show that significant progress on child mortality has been made in many countries but that this overall success is often coupled with increased inequalities between advantaged and disadvantaged groups (Chopra et al. 2012). In China and India, for example, disparities in mortality persist between boys and girls younger than 5 years, a function of entrenched gender discrimination (You et al. 2010). These examples raise challenging questions about how ethically to assess such cases and set priorities for the allocation of scarce public health resources.

Chronic underfunding of public health, made worse by the economic downturn, has resulted in drastic and unprecedented reductions in the public health budget. In consultation with your staff and community board of health, you have raised the possibility of redirecting resources from maternal-child health into other programs based on a number of practical and ethical considerations. As with national statistics, the city has seen significant declines in black infant mortality, even as black-white disparities remain. You note that although the maternal-child health programs are cost-effective, their impact on reducing black-white disparities seems to have stalled. Other programs appear to meet targets more consistently. To help support these other programs, you note that allocating resources to more effective programs provides more “health” per dollar, thus meeting the utilitarian demand to maximize overall health, which many view as the primary goal of public health and health policy (Powers and Faden 2006). In addition, although black-white disparities in infant mortality persist, blacks have made significant gains, declining more than whites in some decades. You note that remaining inequalities could be deemed ethically acceptable by some standard s of equity , such as the “maximin” principle . Although this distributive principle is subject to interpretation (Van Parijs 2003), it is generally understood to require that social and economic inequalities work to benefit society’s least advantaged groups. Thus, inequalities (even significant ones) are morally acceptable as long as the least advantaged have significantly benefited (Powers and Faden 2006).

The director of community outreach proposes that the health department not make this decision unilaterally, but instead listen to community opinions on these questions of priorities and fairness. He suggests that the health department collaborate with community partners to host a series of public forums. He insists that a topic of such historic and contemporary concern to the community must be subject to public deliberation. Despite having a history of supporting community discussions, you are concerned about the cost of community forums, noting that they will drain resources from an already slim budget.

National health objectives, established by the Ministry of Health, determine the list of guaranteed interventions. This list, however, is reviewed every 3 years and amended as new scientific and health information emerges. As of 2013, the System o f Guarantees in Health included interventions for 80 health-related conditions (Ministerio de Salud 2013), accounting for almost 60 % of the Chilean burden of disease. The System of Guarantees in Health is a priority system based on acknowledged criteria, namely scientific evidence and socially shared value s. For the system to be effective, the criteria must be transparent, publicly accepted, and open to review and modification.

The law that created the System of Guarantees in Health also mandated a procedure for selecting the guaranteed interventions (Ministerio de Salud 2004). The procedure factors in public opinion research to identify social consensus on health priorities, studies to identify effective interventions that prolong and improve quality of life, and assessments of interventions’ cost effectiveness (Burrows 2008). The procedure determines priorities with an algorithm that includes these factors and information on disease burden and health system capacity (Missoni and Solimano 2010). After choosing the health interventions, the health ministry elaborates on a package of interventions related to specific health conditions and develops clinical guide lines for such interventions.

Cataract, the main cause of blindness, primarily affects people over 40. This health problem has a high impact as measured by quality-adjusted life years (QALYs) (Ministerio de Salud 2007). Its surgical treatment is effective for 80–95 % of patients. The package of guaranteed interventions includes diagnostic confirmation within 180 days after suspected diagnosis and surgical treatment 90 days after confirmation. In 2013, it was expected that 48,424 cataract surgeries would be performed in Chilean public hospitals and 416 in private institutions.

Multiple sclerosis, an autoimmune inflammatory disease leading to demyelination in the central nervous system, produces a progressive deterioration of health and quality of life. It represents a minimal disease burden at the population level, mainly due to premature death. In Chile, it is estimated that 385 patients are treated for multiple sclerosis each year. The package of guaranteed interventions includes diagnostic confirmation within 60 days; confirmed cases must receive treatment within 30 days. Treatment includes pharmacological therapy and p hysiotherapy.

Prudentially planning for the public’s increased care needs during a pandemic requires assessing surge capacity, especially in critical care units (CCU). However, as pandemics increase in severity, they can overwhelm critical care capacity and contingency arrangements. To make the best use of resources and personnel (even in the absence of a pandemic), patients are triaged—evaluated to determine the type and priority of care to be received. While medical information informs the development of triage criteria, ethical considerations about triage goals—whether explicit or implicit—also play a role. For public health emergencies that overwhelm capacity, some propose adjusting critical care triage criteria to emphasize certain public health goals, like saving the most lives possible (Christian et al. 2006; Silva et al. 2010).

Some contend that utilitarian reasoning should predominate in critical care triage, based on the intuition that, when resources are scarce, allocation decisions should produce the greatest good for the greatest number (Charlesworth 1993; Childress 2004). Critics of utilitariani sm reply that it requires coercion or covertness to succeed, because the public will not voluntarily sacrifice their lives or their loved ones for the greater good (Baker and Strosberg 1992). Utilitarian triage may be unpalatable to the public on the further ground that it quantifies and judges the value of one life over another, which could disproportionally impact particular population groups (Hoffman 2009). Others therefore would base triage decisions on egalitarian considerations, for instance, by giving everyone an equal chance at obtaining a scarce good, an approach for which historical precedent exists (Baker and Strosberg 1992).

Whatever approach is adopted, prior arrangements between policy makers, practitioners, and the public based on thoughtful, transparent deliberation about the most ethical approach to CCU triage usually will improve the legitimacy of d ecisions. Those who promote an approach based on fairness and equity need to consider that, during public health emergencies, the goal of saving lives may force a retreat to utilitarian ethics (Kirkwood 2010; Veatch 2005). While not necessarily unethical in itself, a retreat that overturns prior arrangements lays itself open to charges of illegitimacy.

Variability in the frameworks used to allocate public health resources illustrates the importance of reflecting upon the value s that undergird policy decisions and individual practices, like critical care triage. Appealing spontaneously in the heat of the moment to values that have not been adequately reflected upon or discussed in a transparent and deliberative manner may lead to undesirable outcomes and accusations of unethical practices. While discussions of CCU triage criteria ultimately concern institutional clinical policy and practice, they reflect a larger discussion about the overarching public health goals in the face of large-scale, widespread public health emergencies, like pandemics.

The resulting increased number of patients needing hospital beds has overwhelmed even the surge capacity of the CCUs of a metropolitan city’s tertiary care hospitals. To meet this challenge, a teleconference has been scheduled between several members of the hospitals’ administration, the CCU directors from each hospital, and public health officials involved in leading the jurisdiction’s pandemic response. As a public health official who played a central role in developing the pandemic plan for your jurisdiction, you have been included on the call to provide guidance for the pandemic response.

During the meeting, a number of CCU directors report that their physicians and nurses are concerned about the type of patients bein g admitted into the CCU. Some of the directors see a trend that they suggest is ultimately undermining the efficiency of the pandemic response. They argue that, as the severity of the pandemic continues to increase, their triage criteria should be modified so as to use CCU resources to save the most lives possible. They worry that admitting those who present with the most need is preventing treatment of those who will benefit most from CCU admission. “So long as our triage scheme saves the most lives, it is ethically justifiable” a number of them declare.

The group takes up the proposal of a CCU director to triage according to Sequential Organ Failure Assessment (SOFA) scores—which are derived using a tool that determines a patient’s organ function and failure rate to predict outcomes (Vincent et al. 2000). Were the pandemic’s severity to increase, the group suggests that, in addition to the CCU director’s proposal to use SOFA criteria, even more inclusion, exclusion, and priority criteria could be added with the goal of saving as many lives as possible. They’ve proposed exclusion criteria for CCU admittance that include patients with a poor prognosis, patients with other known health issues, and some mention of age cut-offs, to name a few.

Others involved in the teleconference question whether this is the right approach to take. They argue that, by aiming to save the most lives possible, those who may benefit less from CCU admission, like older adults or individuals with disabilities, will be unfairly affected. They say, “we should not just aim to save lives, but rather save lives fairly.” As you and your public health colleagues are leading the pandemic response, the hospital administrators and CCU di rectors look to you for a recommendation or decision about how to proceed.